Select Committee on European Union Thirtieth Report


FOREWORD—WHAT THIS REPORT IS ABOUT


FOREWORD—What this Report is about

This is an interim report in which we set out the emerging conclusions from our inquiry into the EU wine sector and, more specifically, the European Commission's proposals for reforming it.

Support for wine production costs EU taxpayers nearly £1 billion a year. Despite this, there are chronic wine surpluses and the industry is increasingly losing out to competition from wines imported from the so-called New World. There is no doubt that the EU wine sector is in crisis and that serious reform is needed of the conditions under which it operates. We therefore welcome the European Commission's initiative to deal with the problem.

Though we have reservations about some specific aspects of the Commission's proposals, we believe they are moving the wine sector in broadly the right direction and we support their overall thrust. The present system is encouraging (by its subsidies) the production of wine for which there is no longer a market and inhibiting (by over-regulation) the development of a wine industry which has the potential to compete successfully with those of New World countries. We fully recognise that the process of reform will not be easy and that for some areas of the Community it will involve painful adjustment. For this reason we support not only the Commission's proposal that there should be an end to subsidised distillation but also the parallel proposals that substantial support should be given to rural economies which are heavily dependent on wine production both to restructure their industries to help them to become more competitive and, where necessary, to enable those who are engaged in unsustainable wine production to be resettled into other fields of rural activity.

We are clear, however, that such support, necessary as it is, must not become a way of life. It should be short-term and designed to improve the competitiveness of the EU wine industry while at the same time easing the transition of some producers to other areas of employment. While we recognise that the primary purpose of wine sector reform should be to make the industry more competitive rather than simply to save money, we should not lose sight of interests other than those of producers, in particular taxpayers and consumers. Appropriate short-term financial support should be provided to help get the industry on its feet again, but there is a need to recognise that reform is not about finding other ways of spending the substantial sums of taxpayers' money currently invested in the industry. Support should be time-limited and invested carefully in projects which will enable the industry to connect with its customers and to increase its market share.

The Commission's proposals were published on 4 July 2007 and we have not yet had the opportunity to hear the Government's view of them. However, as it is now five months since we began our inquiry and as the House is about to rise for the Summer recess, we have decided to present an interim report setting out our emerging conclusions in the light of the evidence we have received and of a first reading of the Commission's proposals. We expect to publish our final report in October.

This interim report is necessarily focused on specific legislative proposals for reform. We have discovered however in the course of our inquiry that there are a number of more general issues which lie at the root of the present malaise in the EU wine industry. As examples, there appears to us to be an absence, in some areas at least of the EU wine industry, of coordination between wine growing, wine production and wine marketing, which is having the effect of isolating the producer from the consumer; and we feel that the European wine industry has been slow to recognise the significance of important changes which have taken place over the last 20 years or so in public perceptions of wine as a beverage. Linked to these is a tendency which we have encountered in some quarters to regard wine production almost as an end in itself rather than as a commercial activity. We propose to explore these and other similar issues more fully in our main report in the autumn.

In the course of our inquiry we have heard, on many occasions and from wine-growers and traders both within and outside the Community, that EU wine has an unbeatable heritage and a worldwide reputation for quality. However, these strengths are not being exploited sufficiently in the market place and new consumers are tending to favour wine produced outside the Community. The present regime of subsidies and regulations is clearly not working. We believe however that the Commission's proposals, if accepted, could set the industry on the path to a brighter future.


 
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